Thank you for a wonderfully informative article. As a photographer I have watched Groupon offer several different photography deals. The one which others and myself have long criticized is the sixty minute portrait session for $50. In a large city, we’ve seen 1500 of these sold which points out another problem with Groupon. The failure to consider the capacity of the merchant providing the service. Looking at the deal from one view point, it would take the photographer over 9 months of working 40 hour weeks to fulfill the 1500 deals. That’s assuming they are booked solid for an eight hour day. But that rarely happens. There are gaps in the schedule and people show up late. Next, an hour session, requires prep time and even the barest amount of post production (if only to prepare a disk). In reality, it will take much longer than 9 months to fulfill all those outstanding obligations. What happens when the coupon expires and it has not been claimed due to the merchant being oversold? Either Groupon has to issue a refund or the merchant will honor the coupon past the expiry date.

Now let’s take a look at what the photographer gets. A friend of mine just offered group photography classes. So I can use his numbers. First Groupon wanted a 50% commission off the top. Next, the merchant was responsible for the credit card processing fee which was around 3%. I’m not sure if Groupon is marking up the credit card processing fee but it would not surprise me. In the end, my friend received about 47% and Groupon received 53% of which they claim 3% is for credit card processing.

Going back the the portrait photographer, all this means they are working for $23 an hour for the session. But that does not cover all their expenses, overhead etc. If the photographer spends any reasonable time on post production (editing photos, color/exposure correction, etc.), it can easily add another hour or two to the job. Suddenly that $23/hour is $11.50 an hour. After expenses, the photographer is not even being paid minimum wage (at least in Illinois and perhaps NYC).